Status Update on DOL Overtime Rule

On Friday, November 25th, ANCOR had a members only conference call to discuss the most recent updates on the DOL Overtime Exemption Rule.  Here are my notes:

Barbara Merrill, CEO – Welcome

Eileen McGuire (Wage & Hour Attorney):

• The lawsuits filed by 21 states (including KY’s Gov Bevin) in September to stop the rule was a “hail mary” at best.  The Judgement by an Obama appointed Texas judge last week was a “big surprise.”
• The ruling was a TEMPORARY injunction to stop/block the enforcement of the overtime rule from taking effect 12/1.  It did not (yet) totally invalidate the rule.  Court still examining the merits of the rule and deciding when the DOL has the authority to have such an impact on salaries and the updates of the salary levels/duties tests.
• For provider purposes, the current regulations are what is enforced.  The DOL can not enforce (nor can a plaintiff’s attorney) the higher salaries proposed by the overtime rule.  Exempt employees have to meet the current duties test.
• The Court can invalidate the rule and then DOL could possibly appeal it.  The appeal could go all the way to the US Supreme court, if they wanted to take it that far.  If the TX court validates the rule (changes its mind), the states could then appeal.  We are waiting for the decision on the new rule, whether its valid or invalid.  The action last week (injunction) only temporarily blocked it…hit “pause” until the determination comes.
• Trump administration will put new leadership in DOL.  Depending on public outcry, DOL new leadership could tweak the rule after 1/20 inauguration.  It could also look totally different with the new congress.
• Even though we have the current court case pending, we could still be looking at different types of impacts and strategies.
• Bottom line:  12/1, the overtime rule will NOT be enforced.
• Individual states CAN enforce higher salary requirements. (California, for example.)
• Right now, some providers may have already started paying or reclassifying employees.  Now what?  You can either stay the course and keep what you’ve promised or implemented…or you can change and go back.  Legally, remember if you go back…some states require advance notice to employees.  You can NOT go back retroactively.  Whatever you do, just keep in mind the communications to your employees.  Make sure they know what you are doing and how it impacts them.  Make it clear and don’t implicate any promises that haven’t been met.

Mark Davis/Daryn Demeritt (SOS Campaign Co-Chairs):

• Remember that our SOS campaign was designed to be “evergreen”, to survive no matter what happened with this rule.  The purpose is to ensure that anytime there is an unfunded mandate, the cost must be considered.  Can’t increase the cost of services without increasing the state and federal funding.  Have to pivot, need to look at the HCBS final settings rule, companionship rule…focus on those things if the OT rule goes away.
• This result is a “microcosm” of what to expect in the Trump administration.  Few dull moments.  To reinforce what Eileen said, this is an individual decision on how your agency proceeds with the overtime rule and your employees.  Consult with your legal counsel.  SOS was always intended to be a diverse campaign…the tagline is “funding the future of disability services.”  This overtime rule injunction tweaks our messaging, but doesn’t change the main message.

Provider Perspective:  Stan Soby, Connecticut:

Much of what we’ve done to prep for 12/1…how do you unring the bell?  Middle of some workforce redesign…prepping for this. Reclassified some people, put people over the threshold.  Much of what we’ve done, we will continue, but taking another look back at it next week.  We know that moving some people back from hourly to salary will be welcomed…but have to proceed carefully to be communicative.

Chris Sparks:  (Iowa)

Felt initially that this rule was solving the wrong problem…would take revenue that could be used for increases for DSP’s.  70 of 87 staff would go to non-exempt status effect Monday.  Had a team to guide the transition and built 2017 budget around this change.  $300,000 budget increase.  Adjusted compensation for some staff that needed to remain non-exempt.  Set to fully implement on Monday.  Now what?  1 – proceed with implementation of transitioning previous exempt to non-exempt, but could suspend it if determine it’s beneficial.  Have to assess the impact, including the attitudinal impact.  2 – people they adjusted above the threshold, leave them there.  can’t walk that back.  3 – next week bring in team to assess and make decisions about how to proceed.

Chris Fults (?) – Minnesota

People who were clearly exempt in the duties test, decided to increase salaries to get them at least to the threshold.  Couldn’t make it work to adjust the whole group to the same amount, but increased everyone a bit…gradually.  Also made a small change to job duties.  requiring program coordinators, now have to work a full direct care shift each week.  Eliminating some shifts to allow them to work in other places.  budgeted that way for 2017.  Notified everyone in September about the increases.  Now, this week, significant discussions.  We can’t put the toothpaste back in the tube.  Going to keep it in place.  Would have preferred to use these increases for the DSP.  Only change, 4 staff would have gone to non-exempt, because they were part time….continuing them as exempt.

Linda Plourde – California

170 employees.  15 -20 are affected by this, but due to states min wage increases….inched so close to the threshold, they decided to go ahead with it.

Than Johnson – Ohio

1300 staff members, majority DSP’s.  Absolute workforce crisis.  Overtime has been a problem for a couple of years.  On Nov 8th, looked at paying out the overtime for the most part with possibility something would happen.  Found they had a wage and hour, duties issue a year ago….investigation.  Liability….at this point, continuing with paying overtime instead of moving people to exempt level.  Some would move up by 10K, others by 4K….morale issue…equalizing everyone.  Took simplistic approach at just deciding to pay the overtime.

Gabrielle – Questions?

1.  if we go back to what we did before – is there a recommend notice for employees?  A:  notice would depend on your state law…in Missouri, for example, you’d have to give 30 day written notice.  If your state doesn’t (like Indiana) have a timeframe, just do it within a reasonable time frame, make sure it’s clearly understood.  Could be just a payroll period.  Just don’t make it retroactive.
2.  what are the Obama administration’s options while this is pending?  A:  curious about that, too!  Heard some legal discussion, that an appeal may not be forthcoming under Trump’s DOL…but can Obama’s DOL admin appeal?  Don’t know!
3. Bonnie:  for anyone on the line, has anyone on the line communicated formally with employees about this ruling and changes?  Feedback?  A:  WE’ve only told the ones who were supposed to from salary to hourly, that they won’t…that they won’t have to clock in and out.  Still encourage them to track how much they work as salary employees to try to track.  Chris – Not making any changes to the plan – then let the ones who were supposed to go to hourly…contacted them directly.
4. On what grounds who DOL challenge the court’s authority?  A:  DOL position is they have the authority that they can define the limits of FLSA.  The Judge in this texas case said they were exceeding their authority because it dictates the salary, that it should only affect the duties test.  It’s getting a bit murky.  In the footnote of the ruling, the judge said that he isn’t saying that DOL can’t set salary….
5. What are the expected timeframes from the Texas court judge?  A:  looking at the court docket and they have not set a projected date for hearing.  They have canceled a nov. 28th date.  Nothing to report.
6. Than:  Is there a countersuit possibility from a labor organization?  A:  at this time, not sure if they could file amicus briefs with the DOL?  if they haven’t done so already?  Not sure yet.  When the 21 states filed suit in September, it was unsure.  Many groups feel this decision is cheating workers out of well deserved pay.

Esme Grant Grewal:

-big hit to the current administration

-may see an appeal from Obama admin to this judge’s decision

-in next administration, we wouldn’t expect to see Trump admin enforcing any rule at the federal level even if Texas judge validates the rule.

-with republican controlled congress, we are likely to see them address this right away.  injunction might soften it a little bit.

-injunction might delay action on this in the congress.

-a lot of credit to trump’s success is the working class and how they react to this.  could be too in the weeds for most people until they feel it in their pocket books.

Than:  Once the election results were done…the rule was still in effect 12/1.  we discussed before the injunction how long it would take to roll back the rule?  A:  Daryn mentioned this that the rule gets complicated.  Remember this is temporary injunction…to prevent harm to the plaintiff while they are figuring out the rule.  This is temporary.  The new admin just can’t throw out the rules, have to go through process of introducing a new federal rule.

Nancy Hargraves (Massachusetts) – responded to Bonnie’s question.  Just wanted to say we had already put out a written communication to all staff at each level effected.  Raised people to the threshold and beyond due to the compression issue.  Will go in effect 11/27, start of payroll.  Also communicated to category of employees who will be eligible for overtime.  Complete a tracking system, and even the minutes they respond to on-call, after hours and weekends.  I may get cut off, on a train.  We aren’t changing anything.  Going to evaluate it going forward.

Esme – in closing:

1 – Eileen is an outstanding atty, heavily rely on her and her colleagues work.  We have made it a priority that one of our member benefits is to give members access to this legal counsel.  Limited access from Gilliland, McGuire and Harper.  Can help with state notice laws.  (Available to individual ANCOR members only.)

2 – Thankful to be at the table, not on it.  We were named in the federal rule.  We were notified of this injunction, being brought into discussions because people know us and know we matter.  Great to be at the forefront and not on the receiving in.

*Note from Shannon – please email me directly if you have any questions regarding these notes.